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    Private and public schooling: The Indian experience

    Geeta Gandhi KingdonUniversity of Oxford

    PEPG 05-15

    Preliminary draft

    Please do not cite without permission

    Prepared for the conference:

    "Mobilizing the Private Sector for Public Education"

    Co-sponsored by the World BankKennedy School of Government, Harvard University, October 5-6, 2005

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    1. Introduction

    The purpose of this paper is to present an overview of the Indian experience with private and

    public schooling. It does four things: (i) shows how the enrolment share of different school-types

    has changed over time, (ii) illustrates from Indian literature on the relative effectiveness and costs of

    government, aided and private schools, (iii) discusses the experience of public-private partnerships

    in education in India and (iv) summarises issues relating to the school-choice debate in India in light

    of recent/current educational legislation.

    Analysis of education in India in general and of private and public schools in particular is

    hampered by the lack of availability of data. Despite recent improvements in the educational

    database in India (Mehta, 2005), there is a serious paucity of reliable educational data in India.

    Firstly, the official data collection exercise on schools (both annually and in the periodic All India

    Education Surveys) collects information only on the so-called recognised schools. Thus, large

    numbers of private schools are not included in the official data since they are unrecognised

    (Kingdon, 1996a). Secondly, coverage of even the recognized schools is incomplete. For instance,

    coverage of various types of special schools is patchy across different states, such as Central

    Schools, Army Schools, Education Guarantee Schools, schools registered with national examination

    boards, etc. (Mehta, 2005). Thirdly, enrolment figures in school-returns data are unreliable because

    failing/unpopular publicly funded schools exaggerate their student numbers in order to justify their

    existence (Drze and Kingdon, 1998). Fourthly, no national, state or district level data are collected

    on student learning achievement in primary and junior education in private and public schools;

    while exam boards do have achievement data for secondary school level, these are not publicly

    available to researchers and in any case, they are not linked to student, teacher and school

    characteristics.

    Partly reflecting this lack of data, there is a paucity of good research on educational issues in

    India. Much of the extant research using achievement production functions merely establishes

    correlations rather than causation between student achievement and particular school inputs. The

    inability to deal convincingly with issues of the potential endogeneity of school inputs has been due

    to the ubiquitous problems of lack of credible instruments and lack of panel or experimental data,

    though two recent studies have used randomised experiments to study the impact of particular

    educational interventions (Banerjee et. al., 2003; Duflo and Hanna, 2005).

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    Section 2 presents evidence on the relative sizes of private, aided and government schooling

    sectors in India. Section 3 examines the relative effectiveness and per pupil costs of private and

    public schools in India. Section 4 discusses Indias experience with public private partnerships and

    Section 5 considers issues related to the school-choice debate in India in light of recent and

    forthcoming educational legislation.

    2. The relative sizes of the private and public schooling sectors

    The very first fact about the private and public schools in India is that even their relative

    enrolment shares are not known. This is mainly due to a failure to include all types of schools in

    official data collections but also partly due to exaggeration of enrolments in publicly funded schools

    in these data (Kingdon, 1996a; Drze and Kingdon, 1998).

    Table 1

    School-type Basic / Elementary education Secondary education

    Primary(also known as

    lower primary(grades 1-5)

    Upper Primary(also known as

    junior or middle)(grades 6-8)

    Secondary(also known as

    lower secondary)(grades 9-10)

    UpperSecondary

    (grades 11-12)

    Government

    Aided

    Private- recognized- unrecognized

    2.1 Typology of school-types in India

    Table 1 describes school types and school levels in India. There are three main school types:

    government, aided, and private. Schools run by the central, state or local governments are referred

    to as government schools. Schools run by private managements but funded largely by government

    grant-in-aid are known as private aided or just aided schools. In the first two decades after

    independence, these schools were somewhat similar to the current charter schools in the US and

    they charge the same fee levels as government schools (which is now nil). However, following

    important centralising legislation in the early 1970s, their teachers are paid at government-teacher

    salary rates directly from the state government treasury and are recruited by a government-

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    appointed Education Service Commission rather than by the school. Thus, government and aided

    schools are now very similar and they are both publicly funded. Schools run by private

    managements without state aid are known as private unaided schools. These run entirely on fee-

    revenues and have virtually no government interference in matters such as teacher recruitment.

    These are thus the genuinely private schools and we refer to these simply as private schools rather

    than using their full name private unaided.

    Private schools in turn divide into two types: recognized schools and unrecognized schools.

    It turns out that for understanding the true size of the private schooling sector in India, the

    distinction between recognized and non-recognized schools is crucial. While government

    educational data collection exercises are intended to be a census of schools in the country, in fact

    they cover only the so called recognized schools and do not cover the unrecognized schools1.

    To be eligible for government recognition, a private school is by law required to fulfil a

    number of conditions2. However, hardly any private schools that get recognition actually fulfil all

    the conditions of recognition. For instance, many recognized private schools in Uttar Pradesh run

    in rented buildings when having an owned building is a mandated condition of recognition

    (Kingdon, 1994). Indeed, some of the conditions are, or have over time become, mutually

    inconsistent3. The main benefit of having recognition used to be that with recognition a school

    becomes entitled to issue valid Transfer certificates (TCs). TCs from a recognized primary school

    are mandated to be required for admission into upper primary and secondary schools. However, the

    1School returns data are collected by three government agencies. (a) the annual school census by the Ministry of

    Human Resource Development (MHRD) which collects basic data on schools; (b) the more detailed but only periodiccensus of schools every 7-8 years by the National Council of Educational Research and Training (NCERT) and annualDistrict Information System for Education (DISE) by the National Institute of Educational Planning and Administration

    (NIEPA). Coverage of schools in DISE is not yet fully comprehensive (Mehta, 2003) and the MHRD data do notprovide enrolment figures by school-type (private, aided, government). Thus, the NCERTs data (known as the AllIndia Education Survey) is the most used, even though it is dated. While its called a survey it is in fact intended to bea census of all recognized schools in the country.2In the large north Indian state of Uttar Pradesh, in order to gain government recognition, a school must be a registered

    society, have an owned rather than a rented building, employ only trained teachers, pay salaries to staff according togovernment prescribed norms, have classrooms of a specified minimum size and charge only government-set fee rates.It must also instruct in the official language of the state and deposit a sum of money in the endowment and reservefunds of the education department. Another condition added in the early 1990s was that the school seeking recognitionmust not be situated within 5 kilometers of a government school (Kingdon, 1994, chapter 2).3For instance, the condition to charge only government-school tuition-fee rates is now incompatible with the condition

    to pay the government-prescribed salary rates to teachers, since government school fee rates have fallen consistentlysince the 1960s and were abolished altogether in the early 1990s in all elementary schools and since government-

    prescribed minimum salaries to teachers have risen inexorably over time: Kingdon and Muzammil (2003, chapter 13)estimate that average teacher salary rates rose by a remarkably high rate of 5.0% per annum in real terms in the 22 yearperiod between 1974 and 1996.

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    emergence of large numbers of unrecognized primary schools (as shown later) suggests this may no

    longer be necessary.

    2.2 Private schooling share according to official and household data

    Despite the data deficiencies described above, it is clear that there has been a massive

    growth of fee-charging private schooling in the recent past, as noted first in Kingdon (1996a). This

    paper challenged the prevailing notion in Indian writings, based on official published data, that the

    size of the private sector in primary education was infinitesimally small or negligibly small. It

    drew attention to the fact that Published educational statistics in India ignore unrecognized

    private schools and include only the recognized private schools Moreover, enrolments in

    government-funded schools are greatly over-reported in education data. as a result, official

    education statistics are seriously skewed: they exaggerate the size of the free, government-funded

    elementary school sector and greatly understate the size of the private fee-charging elementary

    school sector.

    Table 2 shows the enrolment share of private schools in rural and urban India, according to

    both official school returns data and household survey data. The bottom half of the table shows

    corresponding figures for Uttar Pradesh, a state with high levels of private school participation. The

    latest official data available on enrolment by school-type are for 1993. The Seventh All India

    Education Survey was carried out in 2002 but its results have not been made available yet. The

    latest figures for the year 2003-4 from the District Information System for Education (DISE) are

    included in Appendix 1 because of its incomplete coverage.

    Table 2 shows that according to official statistics, in 1993, only 2.8 per cent of all rural

    primary school students in India were studying in private schools but, according to household

    survey data for the same year, 10.1 per cent of all rural Indian 6-10 year old school attendees went

    to a private school, a figure that is more than three times as high as the official estimate.4 Overall,

    9.8 per cent of all 6-14 year old rural Indian school-goers went to private schools (Shariff, 1999).

    In rural Uttar Pradesh, official estimates put the 1993 enrolment share of private primary schools at

    8.8 per cent but according to the 1993-94 National Council of Applied Economic Research

    (NCAER) household survey, the actual share was 30.7 per cent, again more than three times as high

    4 The two sources are not exactly comparable since it is possible that some school-going 6-10 year olds may attend pre-primary or upper primary classes. However, it is unlikely that many 6-10 year olds would be in upper primary classes.

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    as the official estimate. By the time of the PROBE survey in 1996, 36 per cent of all primary-age

    students (6-11 year olds) in rural UP attended private schools (Probe Team, 1999)5.

    Table 2

    Enrolment share of private schools, 1993

    Official published

    data

    Household survey

    data

    Area School level 1993 1993

    ALL INDIARural Primary 2.8 10.1

    Junior/middle 6.5 7.9Secondary 6.8 10.1

    Urban Primary 25.7 26.2*

    Junior/middle 18.8 15.4*Secondary 11.5 11.2*

    UTTAR PRADESHRural Primary 8.8 30.7

    Junior/middle 28.3 23.3Secondary 10.9 14.4

    Urban Primary 53.3 49.7*Junior/middle 29.6 25.1*Secondary 5.3 11.3*

    Source: Official data computed from the Sixth All India Education Surveys (NCERT, 1998). Rural

    household survey figures are based on the authors calculations from 1993-94 NCAER survey. Theurban household survey figures marked* are taken from 1995-96 National Sample Survey publishedin NSSO (1998: A69-82).

    The reasons for the large discrepancy between household survey estimates and official

    estimates of the size of the private schooling sector in India are discussed in Kingdon (1996a) and

    Kingdon and Drze (1998): Firstly, government and aided school teachers have an incentive to

    over-report their enrolments when there is low demand for such schools, and this reduces the

    apparent enrolment share of private schools; secondly, as stated above, all official school censuses

    are carried out only in the government-recognized schools and in most Indian states, there is no

    5De et. al. (2002) compare the private sectors share in total elementary school enrolment in two different household

    surveys in mid-1990s and report wide discrepancies in the share according to the two surveys. E.g., in Haryana,NCERT (i.e. official) data show the private share as 2%, NCAER 1993-1994 survey shows it as 12.9% and the NSSO1995-96 survey as 18.9%. Similarly, in Karnataka, NCAER shows a private share of 9.6% but NSSO of only 0.9%.Thus, even two large household surveys for roughly the same time period show quite different private shares. Onereason for this could be genuine change in private enrolment share between 1994 and 1996, though this seemsimplausible. Another explanation is that data quality is poor in one or the other survey. A third, most plausible,

    explanation is that to many parents, the distinction between aided and private schools may not be clear, especially whenaided schools do charge some fees. Moreover, since aided schools all start life as private schools, their names are likeprivate schools, and generally quite distinct from the names of government schools.

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    requirement on private primary schools to be even registered, let alone be government-recognized.

    It seems that rural private schools in particular do not easily get government recognition, for which

    many conditions need to be shown to be satisfied, failing which bribes are needed (Tooley and

    Dixon, 2003). As Kingdon (1996a) says, given the exacting conditions for and scant rewards of

    recognition, it is not surprising that most private primary schools remain unrecognized.

    2.3 How under-estimated is the size of the private school sector?

    How much is the size of the private school sector underestimated as a result of the exclusion

    of the unrecognized schools? Evidence suggests that the true size of the private schooling sector is

    massively underestimated in official data due to enumerating only the recognized schools.

    Household survey data give a picture closer to the truth than official statistics since parents have no

    incentives to over-report enrolment in publicly funded schools or to report enrolment in recognized

    schools only. Thus, 1993 household survey data in Table 2 already give an indication of the extent

    to which the enrolment share of private schools is underestimated in official data. Some surveys do

    make a distinction between recognized and unrecognized schools when asking households the

    school-type attended by currently enrolled children. Evidence from the latest round of the National

    Sample Survey to include questions on school-type, in 1995-96 (Table 3) shows the enrolment

    share of private recognised and unrecognised schools. Haryana, Punjab, UP, AP and Bihar (shaded)

    have high private enrolment shares in both primary and upper primary schools. The all-India row

    shows that 17.3% of all primary aged children attended private schools in India in 1995-96, 12.5%

    in recognised and 4.8% in unrecognised schools. Thus, by this survey, private school enrolment

    share is underestimated by 28%. It may be that the extent of under-estimation is greater in rural

    areas6. However, it is possible that some parents will not know the difference between recognized

    and unrecognized schools, so some caution is warranted.

    6Data from the rural Survey of Living Conditions: Uttar Pradesh and Bihar, 1997-98 show that in rural Bihar only 1%

    of enrolled 6-10 year olds attend recognised private schools while 11% attend unrecognised private schools, i.e. theenrolment share of unrecognised private schools was 11 times that of the recognised schools. The corresponding figures

    for rural UP were 7% and 15% respectively, i.e. the enrolment share of unrecognised private schools was just overdouble that of recognised private schools (though the implied 22% total private share is lower than the 36% privateshare found in the PROBE report which had data for 1996).

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    Table 3

    Percentage of children attending private recognised and unrecognised schools (1995-96)

    Primary Upper PrimaryRecognised Unrecognised Total private Recognised Unrecognised Total private

    Andhra Pradesh 21.2 5.6 26.8 21.1 4.5 25.6Assam 1.1 3.5 4.6 0.4 0.9 1.3Bihar 11.0 9.2 20.2 9.0 6.2 15.2

    Gujarat 2.8 0.3 3.1 2.2 0.4 2.6Haryana 29.8 18.7 48.5 15.5 6.6 22.1

    Himachal Pradesh 3.5 0.1 3.6 5.9 0.9 6.8Karnataka 5.8 0.5 6.3 6.4 0.8 7.2

    Kerala 12.8 2.8 15.6 5.7 1.4 7.1Madhya Pradesh 6.6 0.9 7.5 5.1 0.6 5.7

    Maharashtra 4.2 1.0 5.2 3.5 0.7 4.2Orissa 2.0 1.0 3.0 3.2 4.1 7.3Punjab 21.7 15.5 37.2 14.9 8.7 23.6

    Rajasthan 9.5 0.9 10.4 8.0 0.4 8.4Tamil Nadu 7.5 0.8 8.3 5.9 0.1 6.0

    Uttar Pradesh 24.8 10.0 34.8 19.8 6.5 26.3West Bengal 3.5 1.1 4.6 1.9 0.8 2.7

    All India 12.5 4.8 17.3 8.8 2.6 11.4

    Source: 52ndround National Sample Survey data, as reported in Aggarwal (2000). States withhigher than the national percentage are shaded.

    Another way of working out the extent of under-estimation is to do a true census of all

    schools in an area, unlike in the official data collections. This is quite difficult since there is noregister of unrecognized schools and it involves going from street to street to find such schools.

    Three studies so far have attempted this, though it is not known how meticulous they were, relative

    to each other, in seeking out unrecognised schools. Aggarwal (2000) found that in his four

    surveyed districts of Haryana in 1999, there were 2120 private primary schools of which 878 (or

    41%) were unrecognized. Using information on the date of establishment of each school, he

    calculated that the number of unrecognized schools in Haryana was doubling roughly every 5 years.

    The PROBE survey of 1996 in 5 north Indian states did a complete census of all schools in 188sample villages. It found 41 private schools, out of which 26 (or 63%) were unrecognized. Mehta

    (2005) finds that in 7 districts of Punjab, there were 3058 private elementary (primary +junior)

    schools, of which 2640 (86%) were unrecognized. Clearly, unrecognized schools form the majority

    of private primary schools in the 5 north Indian PROBE states and in Punjab.

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    2.4 How private and aided school enrolment shares vary by level of education

    It is noteworthy that according to household survey data in Table 2, the size of the private

    school sector is generally proportionately largest at the primary level, smaller at the junior level,

    and smallest at the secondary level. This is also corroborated in Table 3 which shows that in India

    (rural+urban) in 1995-96, among primary age enrolees 17.3% attended private school, while among

    junior school enrolees, only 11.4% attended private school. Since government regulations such as

    the requirement to be recognized and pay high prescribed-minimum salaries to teachers are

    progressively more stringent for higher levels of education, more private schools exist at the

    primary level than at the junior level and the secondary level7. Since the children of the poor are

    best represented at primary education, this pattern is clearly perverse from the point of view of

    equity.

    The enrolment share of different school-types in the 1993 NCAER household survey for

    rural India only is presented in Table 48. It shows that in the primary age group (ages 5-10), the

    importance of aided schools varies dramatically by state, with Kerala, West Bengal and Assam

    having very high aided school shares. It is interesting to that these states which have tended to

    have left leaning governments have chosen to deliver primary schooling predominantly via a

    system of aided schools rather than via government schools. In the primary age group, private

    school enrolment is relatively high in AP, Haryana, Punjab and UP; in the upper primary age group

    (11-14 years), the private enrolment share is relatively high in Punjab and UP; in the secondary age

    group (15-18 years), the private share is relatively high in Karnataka, Kerala, Orissa, Punjab and

    UP; and in the higher education age group (19-24 years), the private share is high in Karnataka,

    Kerala, Orissa, Punjab, Tamil Nadu and Assam. These differences at different ages (corresponding

    to different levels of education) presumably reflect the policy choices made by the respective state

    governments, for instance the choice of how many private schools to bring onto the grant-in-aid list

    and how much to control private schools. To our knowledge, there is no attempt let alone any

    satisfactory explanation in the political economy literature, to understand the factors underlying

    these very different policy choices in education by the different Indian states. While the smallness

    7 The government of Uttar Pradesh, for instance, was reluctant to give on objection certificates to private recognizedjunior schools to start secondary grades in their school because of the fear that that will increase the pressure to makethe school aided and thus may increase the state governments expenditure/fiscal burden. Once a private schoolbecomes a secondary school, its teachers join the secondary school teachers union (theMadhyamik Shikshak Sangh,which is by far the strongest teacher union) and start agitating for the school to be made government aided, so that theycan enjoy the much high salaries paid in aided schools compared with government schools. However, this changed in

    the early 1990s in Uttar Pradesh, when the state government started granting permissions for junior schools to becomesecondary schools on the condition that the school will agree not to apply for aided status (will be vitt viheen).8NSS 1995-96 data tables are not available for secondary and higher education ages.

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    of the private enrolment share and the largeness of the aided school share in the left-leaning states

    might be explained by these states anti-private stance and their possible propensity to cave-in more

    easily to teacher union demands, it does not explain why they have not chosen to provide primary

    education primarily via government schools, as in most other states. This is something of a puzzle.

    The popularity of private schooling is clear even among the poor in India. Findings from

    the MIMAP survey in India show that, of all school-enrolled children aged 5-10 years old living

    below the poverty line, 14.8% attended private schools (8% in rural and 36% in urban India). The

    corresponding figures for ages 11-14 (junior school age) and 15-17 (secondary school age) were

    13.8% and 7.0% respectively (Pradhan and Subramaniam, 2000). Firstly this shows that private

    schools are used by poor families, as also found in 5 north Indian states (PROBE Team, 1999) and

    by Tooley and Dixon (2003) in Andhra Pradesh. Secondly, MIMAP numbers presented in

    Appendix Table 2 confirm, for those below the poverty line, the pattern noted earlier, namely that

    use of private schools is greatest at the at primary level.

    2.5 Growth in private schooling

    The most telling statistic, however, is not the share of private schooling in the stockof total

    school enrolment but, rather, the share of private schooling in the total recent increase in school

    enrolment at different levels. Table 5 presents the proportion of the total enrolment increase (over

    time) that is absorbed by private schools. It shows the percentage of all new enrollees who choose

    private schooling. Due to lack of household survey data over time, unfortunately, information on

    enrolment can only be gleaned from official statistics (i.e. only on recognized schools), but even

    these are telling. They show that in urban India, 61 per cent of all the increase in total primary

    school enrolment in the period 1986-1993 was absorbed by private schools and that government

    and aided schools together absorbed only 39 per cent of the new primary enrolment over the period.

    This suggests a massive growth of private primary schooling in urban India. In rural India the rate

    of expansion of private primary schooling was slower: only about one-fifth (18.5 per cent) of the

    rural total increase in primary students was taken up by private schools. However, there was a

    marked acceleration in the growth of rural private primary schooling in this period compared to the

    previous eight-year period of 1978-86, when only a paltry 2.8 per cent of the total increase in

    enrolment was absorbed by rural private schools. It is important to emphasize that these figures are

    all underestimates since they do not include new enrolments in the unrecognized private primary

    schools (Kingdon 1996a).

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    Table 4

    Enrolment share of different school-types in India, by age-group

    (NCAER household survey data, 1993)

    Ages 5-10 Ages 11-14

    Government Aided Private Government Aided Private

    Andhra 84.1 1.7 14.2 93.0 1.3 5.7Bihar 80.4 9.7 9.9 80.3 12.3 7.4Gujarat 83.9 13.9 2.2 77.7 20.1 2.3Haryana 78.9 2.3 18.8 87.9 1.7 10.4Himachal 94.6 0.3 5.1 94.0 0.5 5.5Karnataka 88.5 3.3 8.2 84.2 4.6 11.2Kerala 28.1 53.5 18.5 33.5 56.9 9.7Maharashtra 94.4 4.9 0.7 66.4 31.0 2.7Madhya Pradesh 83.2 10.7 6.1 84.3 13.1 2.6

    Orissa 77.2 18.4 4.4 73.0 23.1 3.9Punjab 70.0 1.3 28.7 84.3 1.3 14.4Rajasthan 91.7 2.8 5.5 92.4 4.4 3.2Tamil Nadu 82.4 9.3 8.4 86.1 7.6 6.3Uttar Pradesh 55.3 14.0 30.7 55.6 18.9 25.5West Bengal 22.5 75.3 2.2 22.1 77.3 0.6Assam 7.3 91.7 1.0 8.7 90.9 0.4

    India 72.7 16.0 11.3 72.0 19.7 8.3

    Ages 15-18 Ages 19-24

    Government Aided Private Government Aided Private

    Andhra 87.2 4.5 8.3 80.0 10.0 10.0Bihar 82.9 13.3 3.9 81.4 13.7 4.9Gujarat 57.5 35.6 6.9 27.6 60.3 12.1Haryana 86.0 2.1 11.9 77.9 11.8 10.3Himachal 88.9 1.4 9.7 82.2 2.8 15.0Karnataka 68.3 13.1 18.6 63.4 15.5 21.1Kerala 24.7 43.8 31.5 17.3 25.3 57.3Maharashtra 30.5 63.2 6.3 15.6 66.4 18.0Madhya Pradesh 83.3 12.5 4.2 78.4 17.2 4.5Orissa 50.8 30.8 18.4 36.1 33.7 30.1Punjab 80.6 3.2 16.2 70.0 3.3 26.7Rajasthan 92.8 4.8 2.4 85.3 8.8 5.9Tamil Nadu 77.6 13.8 8.6 45.2 35.5 19.4Uttar Pradesh 51.6 34.2 14.2 56.2 35.8 8.0West Bengal 17.9 81.0 1.0 11.8 88.2 0.0Assam 8.7 86.5 4.8 3.5 75.3 21.2

    India 62.7 26.6 10.7 53.1 31.6 15.3

    Source: Authors own calculations from the NCAER household survey, 1993-94.

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    Table 5

    Proportion of total enrolment increase (over time) absorbed by private schools

    Urban Rural

    1978-86 1986-93 1978-86 1986-93

    INDIAPrimary 56.8 60.5 2.8 18.5Upper primary 35.7 31.8 7.2 12.8

    UTTAR PRADESHPrimary 75.3 93.9 9.3 41.9Upper primary 63.7 15.8 34.0 54.3

    Source: Authors own calculations from the Fourth, Fifth and Sixth All India Education Surveys(NCERT 1982; 1992; 1998). For details of how these were calculated, see Kingdon (1996a). TheSeventh All India Education Survey was carried out in 2002 but, apart from some flash statistics,detailed data are not yet available.

    In some states, acceleration in the growth of private schooling has been spectacular. Figures

    for Uttar Pradesh are included in the bottom half of Table 5 to illustrate this. In urban Uttar

    Pradesh, 94 per centof all new primary school enrolmentover the period 1986-1993 occurred in

    private schools. Even this dramatic statistic is likely to be an underestimate since it takes no

    account of new enrolments in the numerous unrecognized private schools that are excluded from the

    official statistics. The table also shows that in rural UP, the percentage of total enrolment increase

    accounted for by private schools rose from 9 per cent in the period 1978-86 to 42 per cent in the

    period 1986-93 at the primary level and from 34 per cent to 54 per cent at the junior level. In other

    words, the pace of privatization has increased over time.

    The growth of private schooling offers a plausible explanation for the fact that despite

    falling or virtually static per capita public education expenditure in several Indian states and falling

    share of elementary education in state domestic product (Table 6), these states have improved their

    educational outcome indicators in the 1990s (Kingdon, et. al., 2004). It seems that accelerated

    educational progress in the 1990s was partly due to the contribution made by the rapidly growing

    private school sector.

    Next I turn to examine evidence on the relative effectiveness of private and public schools in

    India, which may help to explain the rise in private schooling in India.

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    Table 6

    Trends in Public Educational Expenditure in the 1990s and

    the increase in current school attendance in the 1990s, by state

    Growth rate of real per-capita

    expenditure on elementaryeducation(% per year)

    Share of elementary

    education expenditurein state domestic product(%)

    Increase in current school

    attendance of rural 6-10year olds (1993-1999)(percentage points)

    1990-1 to 1997-8* 1990-1 1997-8 male female

    Maharashtra 5.9 1.2 1.3 5.8 11.0Orissa 4.9 2.5 2.8 9.6 18.0Assam 4.6 2.6 3.7 -- --

    Karnataka 4.3 2.0 1.9 8.4 17.1Himachal Pradesh 3.3 4.1 - -- --

    Rajasthan 3.3 2.4 2.5 17.5 29.6Haryana 2.8 1.2 1.1 6.6 17.4Gujarat 2.7 1.9 1.6 5.0 10.9

    Tamil Nadu 1.5 2.3 1.8 4.7 10.9Madhya Pradesh 0.9 2.0 1.9 19.1 26.6Andhra Pradesh 0.7 1.5 1.2 17.4 27.4

    Kerala 0.7 3.3 2.1 1.8 2.7Bihar 0.4 3.3 3.6 11.0 19.0

    Uttar Pradesh -1.8 2.5 2.0 13.5 26.0West Bengal -2.5 1.5 1.0 11.4 17.3

    15 states combined 1.4 2.0 1.8 11.8 20.1

    Source: Table 5.3 in Drze and Sen (2002: 169) for the first two main columns. Authors owncalculations from data in the NFHS-1 and NFHS-2 reports, in the third main column. Note: *Using

    wholesale price index deflator.

    3. Internal efficiency of private and public schools

    3.1 Relative effectiveness of private and public schools

    Due to the lack of achievement data linked to school and teacher characteristics, school

    effectiveness studies in India are based on small surveys of schools in individual states, rather than

    on nationwide or even statewide data. Since schools are affiliated to different examination boards,

    and since curricula and examinations differ by exam board, there is no comparable measure of

    learning achievement in private and public schools for a given age-group/grade for India (or for any

    one state) as a whole9. However, for schools affiliated to any given examination board,

    9 Each Indian state has its own examination board for secondary school examinations. In addition there are twonational examination boards the Central Board of Secondary Education (CBSE board) and the Indian Council forSecondary Examinations (ICSE board). A school in any given state has to seek a no-objection certificate from the stategovernment in order to bypass the state examination board (which conducts examinations in the states local language)and to affiliate to either of the two national exam boards. The CBSE board offers curricula and examinations in bothstate language and in English. The ICSE examination board offers these only in English. Examinations at the primary

    level (grade 5) and junior level (grade 8) used to be held in district level board examinations but these have beenabolished in many states. E.g., in the state of Uttar Pradesh, primary and junior school board examinations weredropped in 1979.

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    comparative figures do in principle exist but are never published by school-type (i.e. disaggregated

    by private and public school) and raw data on achievement scores are not generally made available

    for research purposes10. While the National Council of Educational Research and Training has

    collected data on student learning levels at the primary level as part of the District Primary

    Education Projects (DPEP) baseline, mid-term and final phases, raw data from this is not available

    for research and, in any case, is available only for government funded schools.

    Thus, studies of the relative effectiveness of public and private schools in India have had to

    rely on standardised achievement tests carried out by the researchers themselves in small samples of

    schools (Bashir, 1994; Govinda and Varghese, 1993; Kingdon, 1994, 1996; Tooley and Dixon,

    2003). These studies have been carried out in different parts of India (Tamil Nadu, Madhya

    Pradesh, Uttar Pradesh and Andhra Pradesh, respectively) but they share the common conclusion

    that private school students outperform their public school counterparts even after controlling for

    the schools student intakes.

    While the author was fortunate to obtain data on examination results of High School (grade

    10th) at all 1785 government, aided and private schools affiliated to the CBSE exam board in the

    Delhi Municipality area, this data does not have linked information about schools and teachers or

    any information about students home background. Nevertheless it is of interest to see the

    achievement levels of students in this large dataset which uniquely provides comparable

    achievement information across school-types. Table 7 shows that both pass rates and average

    aggregate percentage mark are considerably higher in private than government schools.

    Government and aided schools are similar in their average marks but both lag behind a great deal

    compared with the private schools. Of course, despite the fact that some poor people also partake

    of private education, the student-intake in private schools is more privileged than in government

    and aided schools. This is shown in Appendix 3, based on simple descriptive statistics from the

    NCAER household survey and a multinomial logit model of choice of school-type. Thus, these raw

    achievement data by school type cannot be used to infer anything about the relative effectiveness of

    private and public schools in India.

    10 In the ICSE examination board, virtually all affiliated schools are private, so this data does not permit private-publiccomparisons.

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    Table 7

    Achievement levels, by school type, 2004

    (Delhi Administration area)

    School-type No. of schools Percentage of passes Average mark

    Mean SD Mean SD

    Government 839 49.9 20.7 42.0 7.7

    Aided 196 56.2 24.8 45.1 10.0

    Private 631 82.0 18.8 61.0 11.8

    Other 38 93.6 4.9 62.5 5.4

    Note: Other schools are highly resourced central-government funded schools, constituting 36Central schools (Kendriya vidyalaya) which serve children of employees of the Indian federalgovernment who are in transferable jobs, and 2 Navodaya schools which have a selective merit-

    based intake.

    As is well known, even in studies that have information on measurable student

    characteristics, a major problem in studying the impact of school type on student achievement is

    that students may choose school-type on the basis of unobserved traits such as ability/motivation. If

    more able or more highly motivated students choose private schools then any private school

    achievement advantage over public schools after controlling for observed student characteristics

    cannot be simply attributed to school-type. To have clean impact evaluation, one needs either a

    randomised experiment with students randomly assigned to private and public schools, or to have a

    convincing way of dealing with endogenous sample selection into private and public schools. There

    are no randomised experiments available in India and indeed, to our best knowledge, anywhere, to

    study the relative effectiveness of private and public schools. Kingdon (1996) is the only study for

    India that even attempts to control for potential endogenous selection when comparing private and

    public schools, though it is always possible to quibble with the validity of the identifying exclusion

    restrictions chosen to identify the selectivity variable lambda in cross-section data.

    As an illustration, Table 8 summarises Kingdons findings from Uttar Pradesh. The method

    of comparing the relative effectiveness of the different school-types is as follows: Choose a pupil at

    random from the entire student population in the district and give her the average characteristics of

    the full sample of pupils, say X. Then, using the selectivity corrected achievement (ACH)

    equations for government (G), private aided (PA) and private unaided (PUA) schools in Appendix

    Table 3, predict a score for this representative student if she were to attend a G school, another

    score if it were a PA school, and a third score if it were a PUA school (unaided schools are the truly

    private schools). That is, predict a standardised achievement score in each school-type as:

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    ACHG = bGX (i)

    ACHPA = bPAX (ii)

    ACHPUA = bPUAX (iii)

    where the s are the estimated coefficient vectors in the three different sectors andb

    X is a vectorof mean values of the explanatory variables, averaged over the entire sample. Now PUA schools

    achievement advantage overG schools, for example, can be calculated as (iii) - (i), PA schools

    relative advantage overG schools as (ii) - (i), and so on11. The standardised achievement scores

    thus calculated and the relative achievement advantages of different school-types are presented in

    Table 8.

    Table 8, column B shows that the unadjusted (raw) mean achievement advantage of private

    unaided schools over government and aided schools in all subjects falls greatly when personal

    endowments and sample selectivity of pupils are controlled for. For example, PUA schools raw

    mathematics-score premium overG schools of 8.12 points falls to just 1.42 points. This implies

    that, of the PUA schools' mathematics advantage of 8.12 points vis a visG schools, 82 percent is to

    be explained by student intake and only 18 percent can be attributed to school influences. The PUA

    schools raw mathematics advantage overPA schools falls from 8.73 points to 2.71 points, so that

    31 percent of the observedPUA maths advantage is due to school-related factors and 69 percent due

    to student intake. The predicted mathematics score of a child in a PUA school (12.80 points) is 27

    percent higher than her predicted maths score in a PA school, where it would be 10.09 points. In

    other words, PUA schools are 27 percent more effective than PA schools in their maths teaching.

    G schools' tiny mathematics advantage overPA schools increases after controls, suggesting

    that G schools are more effective in imparting numeracy skills than PA schools. It is notable that all

    three school-types are roughly equally effective in imparting reading skills. The raw reading score

    premiums virtually disappear when student background and selectivity are controlled.

    11 Pairwise comparisons which are based on standardising by mean charactersitics in the different sectors (X

    G , XPA ,

    andXPUA ) can also be carried out, as in Jimenez and Cox (1990). The pairwise method gives similar results to the

    above method based on standardising by the overall means (X). For example, the PUA-G conditional advantage is1.46 points using the method described in the main text. A pairwise comparison gives a PUA-G advantage of 1.82

    points standardising by PUA means (XPUA ) and of 1.86 points standardising by G means. (XG ).

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    The finding in econometric studies that private schools are generally more effective than

    public schools is corroborated by the qualitative findings of the PROBE report (PROBE Team,

    1999).

    Table 8

    Raw and standardised achievement scores and relative advantage points

    by sector and subject: G,PA andPUA schools

    Achievement points Achievement advantage points G PA PUA PUA-G PUA-PA PA-G

    (a) (b) (c) (c-a) (c-b) (b-a)

    MathematicsRaw 8.97 8.36 17.09 8.12 8.73 -0.61Standardised (d) 11.38 10.09 12.80 1.42

    (18)2.71(31)

    -1.29(-211)

    ReadingRaw 9.77 10.86 16.85 7.08 5.99 1.09Standardised (e) 13.78 13.73 13.82 0.04

    (1)0.09(2)

    -0.05(-5)

    AchievementRaw 18.74 19.22 33.94 15.20 14.72 0.48Standardised (d+e) 25.16 23.82 26.62 1.46

    (10)2.80(19)

    -1.34(-279)

    OLS standardisedachievement points 20.57 22.60 27.56 6.99 4.96 2.03

    Note: The maximum marks possible in the maths and reading tests were 36 and 29 respectively. Thus, the maximumachievement mark was the total of the two, i.e. 65. The figures in brackets are the standardised achievement advantages

    as a percentage of the raw achievement advantages. The negative signs imply achievement disadvantages.

    3.2 Relative costs of private and public schools

    Next I turn to the relative unit costs of private and public schools, i.e. the monthly cost of

    teaching each student. School expenditures in India are dominated by salaries. For example, in

    government funded primary schools, salary expenditure as a proportion of total recurrent

    expenditure was 96.7% in 1981-82 (see footnote to Table 9). Comparable expenditure breakdowns

    are not available for private schools since official statistics do not even collect financial data on

    private schools.

    However, Table 10 shows a comparison of per pupil expenditures in public and private

    schools in my UP micro study, showing that in private schools, salaries account for a much lower

    proportion of total spending than in government and aided schools. Table 10 also shows that

    recurrent per pupil expenditure in private schools was only 41% of that in government schools and

    55% of that in aided schools. The relative lowness of per pupil expenditure in private schools is

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    due to the fact that teacher salary levels are drastically lower in private than government schools.

    Table 11 shows that average teacher salary in private junior schools was only 42% of that in

    government schools and 43% of that in aided schools. This is consistent with findings from

    different parts of India in the early-mid 1990s (Table 12). More recent figures for UP (in the last

    column of Table 12) show that the private-public salary gap has increased greatly since the early-

    mid 1990s, entirely plausible given the hike in teacher salaries following the Fifth Pay Commission

    bargaining round settled in 2001 (Kingdon and Muzammil, 2003). Private schools pay teachers

    market clearing wages whereas government and aided schools, pay teachers much higher,

    government-prescribed, minimum wages. In other words, there are large economic rents in the

    salaries of teachers in government funded schools.

    Table 9

    Salary expenditure as a proportion of total education expenditure

    YEAR

    Recurrent as a % of total

    educational expenditure

    Salary as a percentage of total

    recurrent educational expenditure

    (%)

    Primary Junior Secondary

    1960-61 74.7 87.9 85.1 72.31965-66 79.4 90.7 89.2 75.31969-70 85.0 92.3 90.4 85.61974-75 87.1 96.6 94.3 87.11981-82 94.8 96.7 93.8 89.9

    1987-88 97.3 NA NA 90.7

    Source: Table 13.13 from Kingdon and Muzammil (2003).12

    12 The figures published for the year 1987-88 for primary and junior education levels are not comparable with figurespublished in previous years because for 1987-88, non-teaching staff salaries have been lumped together with the itemother giving the implausibly low figures of 94.0% and 91.6% for primary and junior education respectively. After thelate 1980s, the publication of the breakdown of total educational spending into salary, consumables, and otherexpenditure has been discontinued, i.e. it does not appear to be published any more, perhaps because it became tooembarrassing to publish such a breakdown. For instance, the 1994-95 copy of Education in India, published in the

    year 2000, had no such table. Prior to 1960-61, published expenditure information was not presented by item ofexpenditure (salaries, consumables, others, etc) but rather by school type (expenditure on boys and expenditure ongirls school, etc) or by source.

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    Table 10

    Annual per pupil expenditures by school-type (Rupees)

    School type Recurrent expenditure per pupil

    Capital expenditure

    per pupil

    Salary Non-salary Total

    Government (G) 1958.40 50.00 2008.40 66.93

    Aided (PA) 1780.93 46.87 1827.80 11.97

    Private (PUA) 735.94 262.96 998.90 72.85

    Source: Kingdon (1994), chapter 6.

    Table 11

    Average monthly salary of teachers by school-type

    School-type (Junior schools)

    Average gross salary of sample teachers

    (rupees per month)

    Government (G) 2449.04Aided (PA) 2429.48Private (PUA) 1036.73

    Source: Kingdon (1994), chapter 6.

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    Table 12

    Evidence from Indian studies on private unaided and government school teachers average

    monthly salaries

    Schoollevel

    PUA pay as a% of

    Kingdonsstudy

    1994

    Kansalsstudy

    1990

    Govinda/Varghese

    1993

    Jainsstudy

    1988

    Bashir'sstudy

    1994

    Singh/Sridhar

    2002

    Lucknowdistrict of

    Uttar Pradesh

    City ofNewDelhi

    5 districtsof Madhya

    Pradesh

    Barodadistrict ofGujarat

    Manydistricts of

    Tamil Nadu

    2 districtsof UttarPradesh

    Primary/ junior

    level

    G pay 42 39 49 47 47 20

    PA pay 43 39 66 - 50 -

    Secondary

    level

    G pay 74 76 - - - -

    PA pay 79 76 - - - -

    Note: The Kingdon study sampled 182 teachers, Kansal 233 teachers, Govinda and Varghese 111 teachers, Bashir 419teachers, and Singh and Sridhar 467 teachers. We do not know the number of teachers sampled in Jain.Sources: Jain (1988); Kansal (1990); Govinda and Varghese (1993); Bashir (1994); Kingdon (1994); Singh and Sridhar(2002).

    Table 13Unit costs, achievement and cost per achievement-point

    (G,PA andPUA Schools)

    G

    (a)PA

    (b)PUA

    (c)PUA:G

    (c/a)PUA:PA

    (c/b)PA:G

    (b/a)

    Cost per student (C) 2008 1827 998 0.50 0.55 0.91

    Predicted mathematics score (M) 11.38 10.09 12.80 1.13 1.27 0.89Cost per mathematics point (C/M) 176 181 78 0.44 0.43 1.03

    Predicted reading score (R) 13.78 13.73 13.82 1.00 1.00 1.00Cost per reading point (C/R) 146 133 72 0.50 0.55 0.91

    Predicted total score (T =M+R) 25.16 23.82 26.62 1.06 1.12 0.95Cost per score point (C/T) 80 77 38 0.47 0.49 0.96

    Source: Kingdon (1994), Chapter 6.

    Table 13 presents cost per unit of output by school-type. The first row shows that, on

    average, PUA schools are about twice as cost-advantageous as G andPA schools. It also shows that

    there is in mathematics (but not in reading) an achievementadvantage associated with attending a

    PUA school. Combining PUA schools' 100 percent unit cost advantage overG schools with their 13

    percent mathematics advantage leads to the conclusion that PUA schools are much more cost-

    effective than G schools in their mathematics teaching. Another way of saying this is that they

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    produce the same level of numeracy skills as G schools at a mere 44% of the cost of G schools.

    They produce the same level of reading achievement as in G schools at half the cost. The

    comparison of PUA schools with PA schools is of similar magnitudes. PA schools' 3 percent

    mathematics disadvantage vis a vis G schools together with their 9 percent reading advantage

    implies that, overall, they are equally or very slightly more cost-effective than G schools.

    To summarise, the results show that PUA schools ability to pay market clearing wages and,

    thus, their far more thrifty use of teachers implies a dramatic unit cost advantage over government-

    funded (G andPA) schools. This reinforces their achievement advantage over the other school-

    types (due presumably to different input mixes and teacher incentives), so that they are

    unambiguously and substantially more cost-effective or internally efficient than both G and PA

    schools, which are roughly equally efficient.

    However, teachers objection to private school salary levels is that market wages are not

    commensurate with the cost of (decent) living. Whether one favours low market wages to achieve

    cost efficiency in education, or high minimum wages which protect teachers at the expense of cost-

    efficiency, is not an ideologically neutral question. However, it seems that in India, teacher salaries

    relative to per capita income are higher than in many other countries13 and that government-paid

    teachers salaries have increased impressively in real terms: Drze and Saran (1993, p32a) report

    that in 1993 a teachers monthly salary in Palanpur (UP) could buy very nearly twice the amount of

    wheat that his monthly salary could buy in 1983. Kingdon and Muzammil (2003) calculate that in

    the 22 year period from 1974 to 1996, teacher salaries in Uttar Pradesh grew by about 5 per cent per

    annum in real terms.

    4. Experience of public-private partnership in education in India

    4.1Why public schools function poorly and private schools well?

    The sorry state of publicly funded primary education in India is well documented and

    provides favourable conditions for the rapid expansion of private schools noted earlier, even among

    groups below the poverty line. The PROBE report found that unlike government primary schools,

    13

    For example, the ratio of average teacher salaries to per capita income (admittedly only an imperfect measure ofteachers standard of living vis-a-vis others) in early 1990s was 2.4: 1 in Latin America and 2.6: 1 in Asia, but a muchhigher 3.6: 1 in India (Colcough and Lewin 1993, p52 and 143).

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    many of which are dysfunctional, private schools provided active teaching: when investigators

    visited these schools, teachers were almost always in class and teaching. It is thought that in the

    increase of private education, the breakdown of government schools is more decisive than parental

    ability to pay. In rural Himachal Pradesh, for instance, there is a good deal of purchasing power

    but the government schools function well, so that there are few private schools. In central Bihar, by

    contrast, poverty is endemic, yet private schools can be found in many villages due to the

    dysfunctional state of government schools (PROBE Team, 1999, p 102). Kremer and

    Muralidharan (2005) have a paper looking at this issue at this conference.

    While inadequate and dilapidated facilities and infrastructure of schools are well

    documented in India14, the malaise of primary education is deeper, having its roots in lack of

    incentives and accountability for public schools and teachers. According to Drze and Sen (1997,

    p76-77), the most striking weakness of the schooling system in rural Uttar Pradesh is not so much

    the deficiency of physical infrastructure as the poor functioning of the existing facilities. The

    specific problem of endemic teacher absenteeism and shirking, which emerged again and again in

    the course of our investigation, plays a central part in that failure. This is by far the most important

    issue of education policy in Uttar Pradesh today.

    The PROBE Report (PROBE Team, 1999, p63) recognised this and linked teacher

    absenteeism and shirking partly with the disempowering environment in which the teachers have to

    work in India. However, it also says yet, the deterioration of teaching standards has gone much too

    far to be explained by the disempowerment factor alone. The PROBE survey in 242 villages

    across 5 north Indian states found that in about half the schools, there was no teaching activity at

    the time of the investigators visit. It is significant that this pattern occurred even in cases where the

    school infrastructure (in terms of number of class rooms, teaching aids and even teacher-pupil ratio)

    was relatively good. Inactive teachers were found engaged in a variety of pastimes such as sipping

    tea, reading comics, or eating peanuts, when they were not just sitting idle. Generally speaking,

    teaching activity has been reduced to a minimum in terms of both time and effort. Andthis pattern

    is not confined to a minority of irresponsible teachers - it has become a way of life in the

    profession (PROBE Team, 1999, p 63). The Report goes on to link teacher absenteeism and

    shirking to the lack of local accountability of teachers. Other authors too have noted lax teacher

    14

    For example, PROBE Team (1999) found that 42% of sample primary schools did not have at least two puccaclassrooms, 60% had leaking roofs, 84% had no toilet, 54% had no drinking water, 61% had no toys, 26% did not havefunctioning blackboards in all classrooms etc., p40-42).

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    attitudes and lack of teacher accountability, e.g., Weiner (1990). This, in turn, has its roots in

    teachers demands for a centralised education system (Kingdon and Muzammil, 2003).

    4.2 Public private partnership in education in India

    In response to the poor functioning of government run schools across many countries, in

    recent years there has been advocacy in favour of private public partnerships in education, i.e.

    publicly funded but privately produced/delivered education. Privately run charter schools are an

    example of PPP in US education. The main supposed advantage of PPPs is that they are a more

    flexible way of producing education, since the entity running the school, such as the private

    management of a school, has considerably more discretion about the running of the school and

    disciplining staff than is possible in public schools.

    An extensive PPP system does operate in India at the junior, secondary and higher levels but

    not so much at the primary level. This is the system of government grant-in-aid to privately

    managed schools. Grants to aided schools account for a very substantial proportion of the education

    budget, for example, about 70% of the higher and 80% of the secondary education budgets in Uttar

    Pradesh (Muzammil 1989, p179-80). PPPs are the main mode of delivery of secondary and higher

    education in much of India.

    At the time India inherited this system from the British at independence in 1948, aided

    schools shared many of the features of the current US charter schools. For instance, charter schools

    in the US avoid government regulations and interference (e.g. they are not obligated to hire

    unionized teachers, have more autonomy than public schools in determining staff disciplinary

    policies, and must attract students to succeed otherwise they have to close down for budgetary

    reasons). Aided schools in India operated on quite a similar system: any recognized private school

    could apply for government grant-in-aid and, once it was granted aided status, it received a per

    student subsidy from the state government. Its teachers were paid out of school revenues and were

    thus accountable to fee-paying parents and to the school manager. They could be disciplined and

    hired/fired at the level of the school.

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    Table 14

    Teacher union activity in Uttar Pradesh (1965-1971)

    year Start

    date

    Finish

    date

    No. of

    days

    Activities

    1965 11 Mar. 28 Mar. 18 30,000 teachers demonstrated; demands included interim relief, equal

    pay to G and PA teachers; hunger strike by some teachers from 22-28March; central govt announced financial help for UP Teachers;GOUP increased salaries of PA teachers by Rs. 20 per month.

    1966 5 Dec. 10 Dec. 5 5,000 teachers demonstrated in violation of prohibitory order;demand was pay parity between G and PA teachers; teacher leaderswere jailed but released on 17th December.

    1968-69 25 Nov. 5 Jan. 45 Initially 3000 teachers demonstrated (600 arrested); strikeintensified; 20,000 teachers sent to jail; Demands included pay paritybetween PA non-teaching staff and G employees and direct salary toPA teachers from the state govt treasury

    1971 27 Jan. 18 Feb. 23 Total strike observed; issues were lack of implementation ofagreements; 1000 teachers and their leaders arrested.

    Source: Extract from Table 10.2 from Kingdon and Muzammil (2003).

    However, teachers of aided schools became increasingly unionised and lobbied hard in the

    mid-late 1960s to be paid directly by the state government rather than via their private

    managements who, they claimed, engaged in unfair practices such as not paying fair wages. Their

    intense lobbying and strikes (as illustrated in Table 14) helped the passage of the momentous Salary

    Distribution Act (1971) in Uttar Pradesh and similar Acts in other states e.g. the Direct Payment

    Agreement (1972) in Kerala. These Acts represented a massive centralisation of school-

    management and they all but removed aided school teachers accountability to their local managers

    (Kingdon and Muzammil, 2003). Thus, over time, aided schools in India have become increasingly

    indistinguishable from public schools because their modus operandi has become more and more

    like that of public schools. In particular, their teachers salaries are paid directly by the state

    government rather than by their school managers, and their teacher appointments are made by the

    Education Service Commission of the state government, as for public school teacher appointments.

    Given the similarities in the institutional arrangements and teacher incentives in aided and

    government schools, perhaps it is not surprising that, as seen earlier, there is little difference

    between government and aided schools in terms of either their effectiveness in imparting learning or

    in terms of their per pupil salary and total expenditures.

    The lax attitudes of government paid (i.e. government and aided school) teachers towards

    their schools and students stem not only from their loss of local accountability, but also from the

    strength and influence of their unions. Union-backed teachers do not fear adverse repercussions on

    slackness in their work. The National Commission on Teachers notes that some of the Principals

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    deposing before it [i.e. before the Commission] lamented that they had no powers over teachers and

    were not in a position to enforce order and discipline. Nor did the District Inspectors of Schools

    and other officials exercise any authority over them as the erring teachers were often supported by

    powerful teachers associations. We were told that that there was no assessment of a teachers

    academic and other work and that teachers were virtually unaccountable to anybody (National

    Commission on Teachers, 1986, p68).

    The lax attitude of aided school teachers is also strengthened by the fact that many of their

    number (mostly teacher union leaders) are also legislators in the state parliament, both as MLAs and

    MLCs15, i.e. they have their sympathisers in the corridors of power, who tend to protect and shelter

    them in case any disciplinary issues arise. Aided school teachers are in a politically particularly

    advantageous position: although they are publicly paid workers, they are not debarred from

    contesting political elections because they are not deemed to hold an office of profit under the

    government (unlike public school teachers). As a result of this, aided school teachers contest

    elections in large numbers. The National Commission on Teachers (1986) stated that the most

    important factor responsible for vitiating the atmosphere in schools, we were told, has been the role

    of teacher politicians and teachers organisations. (National Commission on Teachers, 1986, p.

    68).

    Lastly, a further reason why aided schools perform no better than government schools is that

    the government grant to aided schools is devoid of any performance incentives. Despite the

    existence of certain rules and conditions, the system of grants-in-aid in UP is not strongly linked to

    the qualitative performance of schools. Even when the criterion of examination performance of the

    schools was included, the pass rate was fixed at a paltry 45 percent (and the pass mark is already a

    low 33%)! The same is true with regard to the number of working days. On the whole the system

    still leaves much to be desired and it is not surprising because in practice, political manoeuvres

    often overrule the strict provisions laid down by the state Government to sanction and regulate

    recurring grants and non-recurring grants. The following observation of Rudolph and Rudolph

    (1972, p.105) with regard to the flouting of conditions of grants-in-aid still holds good: these

    grants in aid are technically conditioned upon the maintenance of certain academic and

    administrative standards, but in reality an educational entrepreneur who enjoys political favour has

    little difficulty in establishing his institutions qualification.

    15 Members of the Legislative Council (MLC) in the Upper House of the state legislature, elected from a teacherconstituency, and as Members of the Legislative Assembly (MLA) in the Lower House of the state legislature.

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    While the number of aided schools has expanded tremendously in size in India, the system

    of grants-in-aid has remained essentially the same as when introduced by the British 150 years ago.

    By contrast, the British system of grants itself underwent revolutionary changes and became more

    objective, particularly from the 1920s. The present system of parliamentary grants to local

    authorities in the UK is based on a number of educational indicators and the formula for the

    distribution of needs element incorporates over a dozen factors. Thus, in the UK system,

    educational grant to a school-area is based on a number of objective criteria. This type of a rational

    approach to educational grants to local bodies has been absent in India.

    The Japanese experience with grants-in-aid is instructive because of the interesting

    incentive-structure built into their grant formula: Japan imposed restrictions on enrolment as the

    state subsidy to private schools was linked to the number of enrolments. The sanctioned grant to be

    available to any school was such that more enrolment was a penalty. Yet most schools continued to

    accept more students than the allowed quota because the marginal costs were small and additional

    tuition fee far exceeded the loss of subsidy (James and Benjamin, 1988).

    If aided Indian schools are to increase their efficiency, the formula for grant to them needs

    major revision. What incentives/penalties can be built into grants is an area that deserves detailed

    study. A grant system may be desirable which relates grant to various school performance

    indicators such as percentage of total expenses spent on non-salary costs (to encourage quality

    improvements), percentage of total funds raised from non-fee sources such as parental donations (to

    encourage equitable resource-generation), percentage of parents who are satisfied with the school

    (to encourage accountability), and average number of students per class (to encourage cost-

    consciousness), etc. A more rational grant structure could be a policy correction that has potentially

    the biggest pay-offs in terms of improved cost-efficiency in UP education.

    In summary, the main reason why private aided schools mostly function no better than

    public schools (at least at the junior and secondary levels in Uttar Pradesh where the author has

    done most of her research) is that they have become very like public schools. Publicly funded

    schools function poorly because schools and teachers do not have incentives for performance and

    there is a lack of local level accountability. Governments have lacked the courage to increase local

    accountability of teachers who constitute a well organized group with powerful politicalrepresentation and militant unions bent on protecting teachers interests.

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    5. School-choice issues and education reform legislation in India

    5.1 School-choice issues in India

    In India, school quality clearly matters to childrens schooling participation decisions and to

    their learning achievement (Drze and Kingdon, 2001; Kingdon, 1994), both of which are

    lamentably low16. The PROBE report, commentators in the media, and many education officials

    (the latter privately) lament the parlous state of public schools and mostly agree on the reasons for

    their failure: decrepit, woefully under-resourced schools and frequently absentee teachers17. The

    recommended solutions have revolved around improving the public school system:

    (i) Improving school infrastructure and facilities, provision of books and para teachers,and in-service training of teachers. This has been attempted as part of the DPEP

    projects from the mid-1990s and continues now under the Education for All

    campaign (Sarva Shiksha Abhiyan);(ii) Improving teacher accountability via decentralising measures such as bringing schools

    under management of village local governments (by Panchayati raj legislation). Thishas met with uneven success as teacher unions have opposed the transfer of financial

    powers to panchayats in some states);(iii) increasing parental and community involvement in schools by creating parent-teacher

    associations, village education committees, village womens groups, etc.

    The recommendations for reform have never seriously included consideration of the possibility of

    providing school choice via vouchers as a way of improving accountability of schools and teachers

    towards students and parents, unlike the US and some other countries where there has been

    vigorous debate about and experimentation with alternatives to public schools, such as school

    choice through school vouchers18.

    16 At the turn of the century, 19% of Indian children aged 6-10 (26% of those aged 11-14) were not in school. In the fewdated but comparable tests available of reading and science skills, Indian children have one of the lowest achievementlevels internationally. Using International Association for the Evaluation of Educational Achievement (IEA) data

    collected in early 1970s, Comber and Keeves (1973) and Thorndike (1973) showed that the mean science test score ofIndian students was the second lowest. Iran was behind India by a small margin. Mean scores of students in Bolivia,Thailand, Colombia, Peru, Mexico, Brazil, Chile and Paraguay were all higher than those of Indian students; the meanscore of Japanese students was twice as high as that of Indian students. The results were similar in (own language)reading comprehension: median reading score was 26 points, Chiles mean was 14 points, Irans 8 points and Indiasthe lowest at 5 points. India has not been part of more recent studies of international comparisons of learningachievement. For example, it has not been part of the 1995, 1999 or 2002 (third) International Mathematics andScience Studies (TIMSS). When the cheating that routinely occurs in various board examinations in UP was bannedunder an anti-cheating order enforced by the government of UP in 1992, the pass rate (the proportion of takers who passthe exam) in the High School examination fell from an average of 60% in the previous four years to a mere 14.7% in1992 (Kingdon, 1994). This is when the average pass-mark is very low, a mere 33% being needed to pass High School.17 Kremer et. al. (2005) report that in their 8 country survey, the absence rate among teachers in India was 25%, onlysurpassed by Uganda (27%).18

    While a few recent voices have discussed voucher schemes, these do not represent widespread popular debate orserious thought to the implementation of such schemes (Centre for Civil Society, 2005; Anklesaria-Aiyar, 2004; Kumar,et. al., 2003; Singh, 2003; Weidrich, 2005).

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    There are several plausible explanations for this difference. Firstly, in India (and other poor

    countries), the most obvious failure of public schools is their very visible lack of resources,

    infrastructure, facilities, books and teaching materials. This is justifiably seen as de-motivating for

    teachers and is used to explain/understand their frequent absenteeism. The obvious remedy is seen

    to be for government to fix these physical deficiencies with greater financial commitment. In more

    advanced countries, the focus of school improvement has moved to improving management

    incentives, structures and processes.

    A second plausible reason for Indian governments lack of consideration of a far-reaching reform

    such as school vouchers is their strong fear of upsetting powerful vested interests such as teacher

    unions who are likely to vehemently oppose any proposals to increase their accountability.

    Kingdon and Muzammil (2003) find that the most important pieces of educational legislation in

    Uttar Pradesh in the post-independence period came about immediately after periods of intense

    teacher lobbying and that no state government in India has had the courage to touch legislation that

    might upset teacher unions. Thus, it is possible that teacher unions are a stronger force in India than

    in other countries.

    Thirdly, lack of enthusiasm for a public-private partnership in education such as a voucher

    scheme may also be due to the lack of obvious superiority of Indian aided schools over public

    schools in terms of their effectiveness. As a result of demands by aided school teachers, these

    schools have, over time, become more and more like public schools in terms of centralised

    administrative and managerial arrangements such as direct payment of salaries by the state

    government and appointment of their teachers by state-appointed bodies (Kingdon and Muzammil,

    2003). The lack of enthusiasm for future private sector involvement may arise from this

    disappointing past experience and future expectation that, as soon as a school starts receiving

    government funds, its teachers will inevitably start demanding equal/similar treatment to that

    received by public school teachers, and lobby-appeasing Indian state governments will concede

    their demands.

    Lastly, other reasons why voucher schemes may not been taken seriously in India include

    the non-acceptability of a profit-based approach to education among influential commentators; the

    potential adverse equity impact of such schools (e.g. Hsieh and Urquiola, 2003; Elacqua, 2005); and

    serious concerns about implementation of school choice schemes in the Indian context, such as: (a)how real choice/competition can be achieved in small villages, short of providing transport to

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    nearby villages, which has its own attendant administrative and cost implications; (b) weak

    regulatory systems to ensure compliance with standards; (c) difficulty of uneducated/illiterate

    parents being able to make informed school choice; and (d) the scope for corruption in the presence

    of weak monitoring and high costs of verification, e.g. schools taking vouchers from poor parents in

    return for a small amount of cash, rather than in return for teaching their children, but certifying that

    the children are attending school. This difficulty will not surprise anyone familiar with the

    widespread corruption in aided schools, such as financial mismanagement, abuse of subsidy, abuse

    or mismanagement of scholarship funds, and non-compliance with regulations (Dixon, 2005).

    Nevertheless, school choice and voucher schemes are worthy of wide and robust discussion

    and debate in India as the Indian government legislates schooling reform.

    5.2 Legislation for educational reform in India

    Education has never been an election issue in India (Drze and Sen, 2002) and until the mid-

    1990s or so, there was little public debate about it. Partly due to the New Education Policy

    amended in 1992, and partly spurred by the 1990 Jomtien Education conference, by the mid-1990s

    there grew a popular concern about the lack of universal enrolment. This and a famous 1993

    Supreme Court (Unnikrishnan) judgement led to a growing demand, by 1997, to make education a

    fundamental right under the constitution which would make it legally binding on the state to

    provide education to all upto age 14.

    After a 5 year period of charged national debate, the 86 th amendment of the Indian

    constitution in 2002 made elementary education a fundamental right. This momentous

    amendment places a legal obligation on the Indian state to provide free and compulsory education

    to all children aged 6-14, and the ensuing draft Right to Education Bill 2005 is potentially

    powerful new legislation.

    However, this legislation is motivated by the concern to ensure that all children aged 6-14

    attend school, and is not focused on the effective functioning of schools which would be the means

    of ensuring that school attendance was seen by parents as a high return activity. Attention to the

    issue of the quality, functioning and governance of schools was drawn only very late in the day in

    the right to education debate. In deference to this quality concern, the Bill talks about the childsright to free and compulsory education of equitable quality but the inclusion of the word quality

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    seems merely a token, as seen from the following evasive/obtuse definition provided in the draft

    bill: Equitable Quality in relation to Elementary Education means providing all children

    opportunities of access to, participation in, and completion of elementary education in accordance

    with the provisions of this Act. Thus, this important juncture has not been taken as an opportunity

    to address the issue of school functioning and quality or what Drze and Sen (1997) have called the

    most important issue of education policy, namely teacher absenteeism and shirking. As stated in

    the introduction, any far-reaching reform that affects teachers including the introduction of school

    choice - stands to upset powerful teacher unions that have fought hard, over time, to win legislation

    that shelters teachers from local-level accountability (Kingdon and Muzammil, 2003). Successive

    Indian governments have judged it politically infeasible to upset this group19 through any bold

    legislative measures, and this continues to be the case with the current Right to Education Bill,

    2005.

    One of the provisions of the draft Right to Education Bill is to oblige private schools to

    give 25% of school places to randomly selected students from the weaker sections of society

    (which means mainly persons from low and backward castes) and the government promises to

    reimburse the schools for these places. This scheme does not give all students an equal choice of

    access to private schools and it can be expected to lead to long queues at private schools by hopeful

    poor parents that their child will be chosen. As the Centre for Civil Society in Delhi states if

    passed into law, this bill will do terrible damage to the cause of quality and affordable education for

    all the children in our society. It does not address in any way the rot that exists in government run

    schools and to make matters worse, puts the same government officials, in charge of a large portion

    of private schools (CCS, 2005).

    The draft bill could have a number of implications for the number of private schools and for

    their fee levels. Firstly, it is unclear whether private schools response to the Bill will be to create

    new places to accommodate students from the weaker sections or to replace 25% of existing

    students or a bit of both. If existing students are replaced, the departure of fee-paying students is

    likely to lead to demand for the establishment of new private schools for their accommodation,

    which will themselves allocate 25% of their places to students from the weaker sections. Overall,

    19 One way in which the state governments have sought, in recent years, to circumvent the difficulties associated withmaking regular public teachers more accountable is by greatly reducing the appointment of regular teachers and,instead, appointing contract (or para) teachers in insecure (mostly annually renewable) contracts, in order to lower

    pupil-teacher ratios and relieve multi-grade teaching in single-teacher schools. However, a less charitable interpretationis that the main motivation for para-teacher schemes is the much lower costs of para-teachers vis a vis regular teachers.The quality implications of this policy measure are not yet known.

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    the number of private schools is likely to increase. Moreover, the government intends to

    compensate schools at the lower of the private schools fee rate and per pupil expenditure in public

    schools20. Since per pupil expenditure in public schools is much larger than fee levels in most

    private schools (which pay teachers a fraction of the salary levels of public schools, as seen in Table

    8), the bills stipulations could well affect (e.g. generally increase) private school fee levels, in a bid

    by such schools to claw higher revenues from the government.

    6. Conclusions

    Private schooling has mushroomed in India at levels where the government does not control it.

    According to qualitative accounts, this growth is greatest in areas where public schools do not

    function well. Evidence suggests that private schools are more than twice as cost-effective as

    government schools in the large northern state of Uttar Pradesh. While aided schools a form of

    public-private partnership in education are no more cost-effective than government schools, this

    appears to be because they have over time become more and more like government schools owing

    to aided school teachers demand for comparability with public school teachers. Issues of school

    choice and competition have not seriously been considered in India as a means of improving

    schooling. It is very desirable for there to be both a popular and scholarly debate in India about the

    likely merits and problems of school choice, learning from the experience of other countries.

    20 For every child admitted and educated in [private unaided schools], the appropriate government shall reimburse tothe school at a rate equal to the per child expenditure in state schools/fully aided schools and state funded preschools, or

    the actual amount charged per student by such school, whichever is less, in such manner as may be prescribed (Clause14.2, Chapter 4, Right to Education Bill, 2005)

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